The Evolving Environment for Outpatient Hospital Services: Medicare’s Site-Neutral Reimbursement for

New Off-Campus Locations

Jim Price, Rick Buchsbaum, and Kyle Price Progressive Healthcare Inc.

March 31, 2016

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1. What changed in Fall 2015 regarding outpatient hospital services?

On November 2, 2015, the Bipartisan Budget Act of 2015 was enacted. Section 603 provides

that “effective January 1, 2017, Medicare payments for most items and services furnished at

an off-campus department of a hospital that was not billing as a hospital service prior to the

date of enactment will be made under the applicable non-hospital payment system.”1. In other

words, new off-campus Hospital Outpatient Departments (HOPDs) will be reimbursed at the

lowest possible rate. The new provision attempts to address concerns raised by policymakers

that Medicare should not be paying varying amounts for the same services based on the

location or provider, and that incentives to acquire practices as outpatient departments may

have been improper due to the availability of higher service rates in outpatient settings.

2. Are there exceptions for off-campus HOPDs?

The only exceptions are the services provided by a dedicated off-campus emergency

department. As defined in Title 42 C.F.R. Section 489.24(b), a dedicated emergency

department must meet at least one of the following requirements:

1. “It is licensed by the State in which it is located under applicable State law as an

emergency room or emergency department;

2. “It is held out to the public (by name, posted signs, advertising, or other means) as a

place that provides care for emergency medical conditions on an urgent basis without

requiring a previously scheduled appointment; or

3. “During the calendar year immediately preceding the calendar year in which a

determination under this section is being made, based on a representative sample of

patient visits that occurred during that calendar year, it provides at least one-third of all

of its outpatient visits for the treatment of emergency medical conditions on an urgent

basis without requiring a previously scheduled appointment.” 2

Freestanding EDs face certificate-of-need (CON) limits in most states.

1 McDermott Will & Emery LLP, Congress Takes Step Toward Site-Neutral Medicare Payments in Bipartisan Budget Act of 2015, October 29, 2015, retrieved from www.mwe.com/publications on February 12, 2016. 2 Federal Register, Title 42 of the Code of Federal Regulations, Chapter IV, Subcategory G, § 489.24(b), Special responsibilities of Medicare Hospitals in emergency cases, (1994).

P a g e 3 | 16

3. Why is this change so threatening to hospitals?

Hospitals have enjoyed a Medicare reimbursement premium for many outpatient services,

when compared to other entities. As shown below, this premium could exceed 100%:

As noted by the Government Accountability Office, this reimbursement difference has

encouraged the acquisition of physician practices by hospitals, since hospitals could earn a

“reimbursement arbitrage” on acquired ancillary services.3

For example, by acquiring a cardiology practice with in-office diagnostics, the purchasing

health system would be paid $1,189, rather than $495 (for an increase of $694, 140%), per

Nuclear Stress Test / TMST procedure using the same facility and staff after designating the

diagnostics rooms as an HOPD. See the Technical Appendix for details.

3 Government Accountability Office, Increasing Hospital - Physician Consolidation Highlights Need for Payment Reform, December, 2015, retrieved from www.gao.gov on February 24, 2016.

Asof: 1/1/16 Atlanta

Specialty Service CPTPhysicianOffice

ASC/Other

OutpatientHospital Comments

All Officevisit,establishedpatient,Level4 99214 $108 n/a $181 $73 67%

Imaging MRIJointLowerExtw/ocontrast 73721 $239 $222 $343 $121 54%MRILunbarspinew/ocontrast 72148 $225 $224 $349 $126 55%

PTevaluation 97001 $76 n/a $76 $0 0%Manualtherapy(per15minutes) 97140 $30 n/a $30 $0 0%Therapeuticexercises 97110 $33 n/a $33 $0 0%E-Stim1/>notWndCarePart G0283 $14 n/a $14 $0 0%

Cardiology CardiacRehab 93798 $25 n/a $118 $93 365%Echo 93306 $231 n/a $481 $250 108%NuclearStressTest/TMST 78452 $495 n/a $1,189 $694 140%Pulmonarystresstest/simple 94620 $57 n/a $122 $65 115%StressECHO 93351 $275 n/a $503 $228 83%

GI DiagnosticColonoscopy 45378 $386 $620 $952 $332 54% GIswilltypicallyownanASC

Orthopedics Kneearthroscopy/surgery 29881 n/a $1,896 $2,952 $1,056 56%Wristendoscopy/surgery 29848 n/a $1,337 $1,979 $642 48%

Injforamenepidurall/s 64483 $225 $443 $701 $258 58%Injforamenepiduraladd-on 64484 $90 $54 $54Injectspinec/t 62310 $246 $439 $697 $258 59%Injectspinel/s(cd) 62311 $227 $419 $677 $258 61%Injecttriggerpoints=/>3 20553 $65 $79 $268 $189 238%

Pulmonary SleepLab 95810 $633 n/a $980 $347 55%

MedicareReimbursementforCommonOutpatientProceduresSite-of-ServiceDifferential

HealthSystemPremiumoverlower-

costsetting

PainManagement

MDswillusuallytrytoperformtheseproceduresinan(owned)ASC

TotalMedicareReimbursement(MD&Facility)bySetting

PhysicalTherapy

P a g e 4 | 16

The hospital outpatient services that are affected by Section 603 are those that are rendered in

a new off-campus location and for which Medicare paid via the Outpatient Prospective

Payment System (OPPS). Below are some common outpatient services that are/were not paid

under OPPS and hence are not affected by Section 603:

• Ambulance services

• Clinical diagnostic laboratory

• Physical, Occupational, and Speech Therapy

• Routine dialysis service for ESRD patients

• Diagnostics and screening mammography

4. When does the new policy apply?

This new payment policy is effective on January 1, 2017. It applies to off-campus outpatient

departments of a hospital that were NOT billing as a hospital department prior to November 2,

2015. This policy does not apply to dedicated emergency departments (“freestanding EDs”).

5. What impact will it have on hospitals?

From a reimbursement perspective:

a. There is no change to off-campus locations that were operating prior to November 2,

2015.

b. For new off-campus locations, which includes newly-developed sites and acquisitions

of physician practices, Medicare reimbursement will be reduced to the lowest

applicable amount (i.e., physician practice (known as “non-provider”) or ASC). This

does not apply to free-standing EDs.

From a business perspective, the magnitude of these Medicare reimbursement reductions may

be sufficient to make many prospective outpatient initiatives financially non-viable,

particularly if the patient mix is heavily-weighted toward Medicare and the “reimbursement

arbitrage” would have been significant.

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6. Can hospitals open new outpatient facilities and bill Medicare?

There is no restriction on the ability for hospitals to open new outpatient facilities and bill

Medicare.

7. For such new facilities, what is the impact from the new Medicare reimbursement rules?

Setting aside the free-standing ED exclusion, the impact from the new Medicare

reimbursement rules varies substantially by service, as the above table illustrates. In general,

Medicare rates will drop for many common services, except for Physician Therapy: At new HOPDs, reduction

Service in total Medicare reimbursement

Cardiac diagnostics ~ 50+ %

Office visits ~ 30-50 %

Pain management ~ 40 %

Surgery ~ 35 %

Imaging ~ 30 %

Physical Therapy 0 %

The above percentages include physician reimbursement. The percentage reductions in the

“hospital” (or “facility”) portion is often much larger, as illustrated in the Technical

Appendix.

For services whose patients are primarily Medicare (e.g. cardiac diagnostics), off-campus

growth (either via practice acquisition or new construction) is likely non-viable.

8. Why was this change enacted?

Numerous entities recommended this reimbursement change for a number of reasons:

1. The Medicare Payment Advisory Commission (MedPAC) has recommended since

2012 that Medicare pay hospitals at the same rates as other entities, for certain

outpatient services. MedPAC initially focused on evaluation and management

services (“office visits”), and the recommendation was expanded in 2013 to other

outpatient services. MedPAC estimated in 2015 that these policy changes would save

P a g e 6 | 16

$1.4 billion per year, although it is unlikely that this estimate accounted for the

“grandfathering” of existing HOPDs.4

2. The Congressional Budget Office (CBO) estimated that Section 603 will save $9.3

billion over 10 years.

3. The Government Accountability Office reported in December 2015 that hospital

acquisition of physician practices was correlated with the higher reimbursement for

hospitals, and that due to trends in increased hospital-physician consolidation, CMS

should “equalize payment rates between settings.”

4. Trade associations represent competitors to hospitals, including the American Medical

Association5, likely because physicians wanted to have their ancillary services paid at

the same rate as hospitals.

9. What changes to Section 603 is the American Hospital Association recommending?

The AHA is not trying to change the reimbursement impact that will be effective on January

1, 2017. Rather, its focus with Congress is merely on a “technical correction” with two

objectives:

1. “Hospitals that have made substantial investments in new facilities that were under

development when the Bipartisan Budget Act was signed into law should be protected

consistent with past precedent.”

2. Clarifying that “changes in ownership of a facility do not impact the grandfathered

status of a provider-based HOPD and that grandfathered HOPDs may relocate.” 6

4 Medicare Payment Advisory Commission (MedPAC), Payment Basics: Outpatient Hospital Services Payment System, October 2015, retrieved from www.medpac.gov on February 24, 2016. 5 American Medical Association, H-330.925 Appropriate Payment Level Differences by Place and Type of Service, (no date), retrieved from www.ama-assn.org on February 24, 2016. 6 American Hospital Association, AHA Factsheet: Site-neutral HOPD Technical Corrections, November 16, 2015, retrieved from www.aha.org on February 11, 2016.

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10. What new rules apply to outpatient services regarding modifiers, codes, et cetera?

In 2014, as part of the CY 2015 Outpatient Prospective Payment System Final Rule, CMS

required a new billing modifier on a facility (“provider”) claim and a new place of service

code on professional claims for services furnished in any off-campus provider-based

outpatient departments (e.g., HOPDs). This rule only applies to Medicare patients, and was

mandatory as of January 1, 2016. Use of the modifier (by the hospital) and place of service

code (by the physician) was voluntary during 2015. Hence, this billing change should not

have been a surprise to providers during late 2015. However, the billing rule and Section 603

are complementary, as CMS could not implement some form of “grandfathered” site-neutral

reimbursement without being able to differentiate off-campus from on-campus HOPDs or

identify those off-campus HOPDs that are already (as of January 1, 2016) billing Medicare.

The billing modifier itself is not directly tied to reimbursement. Rather, it was (and is) CMS’

method for segmenting off-campus from on-campus HOPD activity for future policy-setting.

It was seen by many (including Progressive), prior to the 2015 Budget Agreement, as a sign

that within a few years CMS would eliminate or greatly reduce the site-of-service premium

that HOPDs enjoy. This has been the recommendation of MedPAC. Thus, many expect that

CMS will study the volume data in 2017 and recommend reimbursement reductions to some

or all “grandfathered” HOPDs in 2018 or 2019. Since such a change would affect “existing”

hospital margins (and not just planned or potential HOPDs), the change would in turn be very

political.

11. What is the “35 mile rule”, and does it still apply?

In general, acute care hospitals (other than critical access hospitals) can operate outpatient

departments within 35 miles “as the bird flies” from the inpatient campus and structure them

as “provider-based” hospital outpatient departments. Section 603 does not affect this rule.

12. What is the outlook with other payors?

This likely varies by segment:

• Medicare Advantage. Typically, MA plans pay providers a slight (3-5%) premium on

Medicare reimbursement. Thus, MA plans will likely be able to leverage Medicare’s

effective rate reduction on new sites in 2017. However, since the vast majority of

P a g e 8 | 16

services will be provided by either campus-based or grandfathered off-campus locations,

there will likely be little change in actual total payments made by MA plans. Note: the

means by which CMS’ Fiscal Intermediaries will identify grandfathered off-campus

sites has not been promulgated by CMS, since the payment system must reimburse

“new” sites at the site-neutral rates beginning January 1, 2017.

• Commercial. What commercial payors actually do is dependent upon negotiations

between hospitals and payors, and cannot be mandated. However, hospital outpatient

departments already face pricing competition from lower-reimbursed providers, and this

shift in Medicare policy will heighten awareness of the rate premium. We have already

seen in many clients that commercial payors do not recognize the site-of-service

differential for the evaluation and management code (e.g. “facility fee” for “office-

visits”).

• Medicaid – Historically, Medicaid has followed Medicare policy in many

reimbursement areas. However, this will be state-specific.

• The biggest risk for hospitals may be increased patient knowledge regarding

reimbursement rate differentials across locations. Those differences are present today

across type of entity (HOPD/ASC/physician office), but beginning on January 1, 2017,

HOPD rates for Medicare will differ between new sites and those on campus or in

grandfathered locations. “Transparency” is the mortal enemy of large rate differences

for apparently-identical services.

In summary, it is difficult to develop a logical scenario whereby Section 603, by itself, leads

to lower negotiated rates with health plans (for all segments).

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13. What are the strategic implications on hospitals and health systems of this legislation?

A. Practice acquisitions or new outpatient locations by hospitals that depend upon

Medicare “reimbursement arbitrage” to make the investment financially-viable will be

hard to justify.

B. Outpatient growth for services that need relatively-high Medicare reimbursement will

be focused in existing HOPD locations and on campus.

C. New HOPD site growth will be limited to services that:

a. Are still profitable across all payers (such as Physical Therapy, for which

reimbursement rates have not changed)

b. Drive downstream volume. Examples include:

i. Primary care, including urgent care

ii. Low-end imaging

iii. Specialist care (for their non-diagnostic office visits)

iv. Physical Therapy

v. Medical specialists offices and chronic condition clinics (for 340B

margins on scripts written)

c. Meet “system” care management needs even if the HOPD itself is not profitable.

Such needs include:

i. Geographic coverage

ii. Low-cost facilities across the entire continuum of care

iii. Care management intervention services (rendered while performing a fee-

for-service task), such as:

1. Medication dispensing (and medication therapy management) to

patients with chronic conditions; or

2. Physical Therapy re-evaluations at milestones during an orthopedic

bundled payment episode (e.g., pre-surgery; 30 days post-surgery;

270 days post-surgery (for Medicare mandatory bundled payments

for hips/knees at 800 hospitals)), which could assist with managing

and improving reported outcomes, which drives the bonus payment.

d. Complement free-standing EDs.

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14. What happens next?

Many tactical issues are unresolved and will require clarification from CMS, such as7:

• What changes can a “grandfathered” off-campus department make?

i. Can an off-campus department add different services (e.g., add cardiac

diagnostics to a site that currently only offers physical therapy)?

ii. Could an off-campus department change locations and keep its status?

iii. Will the facility be able to expand its footprint? If so, by how much?

• How (if at all) will CMS change its billing, cost reporting, and/or enrollment

procedures?

i. How will CMS identify new/grandfathered departments?

ii. Is split-billing still required? If not, how do hospitals get paid?

• What kind of leniencies will be afforded to free-standing EDs?

i. How will CMS handle reimbursements for scheduled non-emergency services

furnished in a dedicated ED facility?

7 Russo, Greg; Hettich, Daniel J.; Kenny, Christopher; Dressel, Peter; Polston, Mark D., How Does Medicare Reduce Payments? Let Us Count the Ways, King & Spalding, 2016 Health Law & Policy Forum, Section 603.

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Bibliography

American Hospital Association, AHA Factsheet: Additional Hospital Outpatient Services at Risk

for Site-Neutral Cuts, September 8, 2015, retrieved from www.aha.org on February 11, 2016.

American Hospital Association, AHA Factsheet: Site-neutral HOPD Technical Corrections,

November 16, 2015, retrieved from www.aha.org on February 11, 2016.

American Hospital Association, Congress Passes Two-Year Budget Agreement FAQ, October 30,

2015, retrieved from www.aha.org on February 11, 2016.

American Medical Association, H-330.925 Appropriate Payment Level Differences by Place and

Type of Service, (no date), retrieved from www.ama-assn.org on February 24, 2016.

Cassidy, A., et al, Health Policy Brief: Site-Neutral Payment, Health Affairs, July 14, 2014,

retrieved from www.healthaffairs.org on February 12, 2016.

Daly, R., Budget to Slash Medicare Rates for Acquired Practices, October 28, 2015, retrieved

from Healthcare Financial Management Association: www.hfma.org on February 24, 2016.

Daly, R., Hospital-Physician Practice Mergers Drive Some Price Increases: Study, October 22,

2015, retrieved from Healthcare Financial Management Association: www.hfma.org on

February 24, 2016.

Ellison, A., 25 things to know about site-neutral payments, Becker’s Hospital Review, June 29,

2015, retrieved from www.beckershospitalreview.com/finance on February 23, 2016.

Federal Register, Title 42 of the Code of Federal Regulations, Chapter IV, Subcategory G, §

489.24(b), Special responsibilities of Medicare Hospitals in emergency cases, (1994)

Foley & Lardner LLP, Treatment of Off-Campus Outpatient Departments of a Provider,

November 2015, retrieved from www.foley.com on February 11, 2016.

Foley & Lardner LLP, What Do "Site Neutral Payments" Mean to Your Facility?, November 13,

2015, retrieved from www.foley.com on February 11, 2016.

Government Accountability Office, Increasing Hospital - Physician Consolidation Highlights

Need for Payment Reform, December, 2015, retrieved from www.gao.gov on February 24,

2016.

P a g e 12 | 16

Hall Render LLP, Reminder: New Billing Requirements for Off-Campus Provider-Based

Departments Effective January 1, 2016, December 21, 2015, retrieved from

http://blogs.hallrender.com on February 12, 2016.

McDermott Will & Emery LLP, Congress Takes Step Toward Site-Neutral Medicare Payments in

Bipartisan Budget Act of 2015, October 29, 2015, retrieved from www.mwe.com/publications

on February 12, 2016.

McDermott Will & Emery LLP, The Final Provider-Based Status Rule, April 14, 2000, retrieved

from www.mwe.com/publications on February 12, 2016.

Medicare Payment Advisory Commission (MedPAC), Payment Basics: Outpatient Hospital

Services Payment System, October 2015, retrieved from www.medpac.gov on February 24,

2016.

MedPAC, Payment Basics: Outpatient Therapy Services Payment System, October 2015,

retreived from www.medpac.gov on February 24, 2016.

Passon, E., & Molden, M., Site-neutral payments: The billion-dollar Medicare revenue hit you

should plan for now, April 10, 2015, retrieved from The Advisory Board Company: Care

Transformation Center Blog: www.advisory.com/research on February 23, 2016.

Russo, Greg; Hettich, Daniel J.; Kenny, Christopher; Dressel, Peter; Polston, Mark D., How Does

Medicare Reduce Payments? Let Us Count the Ways, King & Spalding, 2016 Health Law &

Policy Forum, Section 603.

Sanger-Katz, M., When Hospitals Buy Doctors' Offices, and Patient Fees Soar, The New York

Times, February 6, 2015, retrieved from www.nytimes.com on February 24, 2016.

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The Evolving Environment for Outpatient Hospital Services: Medicare’s Site-Neutral Reimbursement for New Off-Campus Locations

Technical Appendix: Reimbursement Details

Jim Price, Rick Buchsbaum, and Kyle Price Progressive Healthcare Inc.

March 31, 2016

Medicare reimbursement can be complex when comparing sites of service. This appendix disentangles the details of Medicare reimbursement.

In the “physician office” setting, which CMS refers to as “Non-Facility”, Medicare’s reimbursements for professional and facility services are paid via a Global fee, as a Part B claim. In the ASC or HOPD (“provider”) setting, a Part A facility fee is paid to the facility and the Part B fee is reduced to the physician.

The table below illustrates how Medicare reimburses physicians and hospitals, by setting, for a common cardiac diagnostic:

Medicare’s total payments increase by $694, or 140%,when a case is shifted from the physician office to the HOPD setting. The physician group loses $415 for the “technical component” of the Part B claim, but in return the HOPD is paid $1,108 for a diagnostic test. This is a $694 (167%) increase in the payment for the diagnostic itself.

Example:NuclearStressTest/TMST

PhysicianOffice HOPDEntity ("non-provider") ("provider")

PartB $494.91 $80.16 ($414.75) -84%

Hospital PartA n/a $1,108.46 $1,108.46 n/aTotal $494.91 $1,188.62 $693.71 140%

AttributionbyfunctionPhysician'sprofessionalservice $80.16 $80.16 $0.00 0%Diagnostics $414.75 $1,108.46 $693.71 167%Total $494.91 $1,188.62 $693.71 140%

ClaimtypePhysicianorganization

Difference

MedicareReimbursementbySetting

P a g e 14 | 16

Below are the detailed reimbursements by CPT and related APC:

Asof: 1/1/16 Atlanta

All Officevisit,establishedpatient,Level4 99214 $108.18 $79.03 $0.00 $102.12 BHospitaloutptclinicvisit G0463 $79.03 $0.00 $102.12 5012 J2

Imaging MRIJointLowerExtw/ocontrast 73721 $238.83 $69.39 $152.96 $273.54 5581 Q3

MRILunbarspinew/ocontrast 72148 $225.13 $75.82 $147.94 $273.54 5581 Q3

PTevaluation 97001 $75.96 $0.00 $0.00 $75.96 A

Manualtherapy(per15minutes) 97140 $30.13 $0.00 $0.00 $30.13 A

Therapeuticexercises 97110 $32.62 $0.00 $0.00 $32.62 A

E-Stim1/>notWndCarePart G0283 $13.98 $0.00 $0.00 $13.98 A

Cardiology CardiacRehab 93798 $25.45 $14.30 $0.00 $103.92 5771 S

Echo 93306 $230.98 $64.43 $0.00 $416.80 5533 S

NuclearStressTest/TMST 78452 $494.91 $80.16 $619.83 $1,108.46 5593 S

Pulmonarystresstest/simple 94620 $57.01 $31.12 $0.00 $91.18 5734 Q1

StressECHO 93351 $274.76 $86.27 $0.00 $416.80 5533 S

GI DiagnosticColonoscopy 45378 $385.87 $199.12 $420.93 $752.76 5312 T

Orthopedics Kneearthroscopy/surgery 29881 $556.64 $556.64 $1,339.58 $2,395.59 5122 T

Wristendoscopy/surgery 29848 $523.69 $523.69 $813.76 $1,455.26 5121 T

Injforamenepidurall/s 64483 $224.56 $116.25 $327.22 $585.17 5442 T

Injforamenepiduraladd-on 64484 $89.60 $53.62 $0.00 $0.00 N

Injectspinec/t 62310 $245.79 $111.93 $327.22 $585.17 5442 T

Injectspinel/s(cd) 62311 $226.83 $92.25 $327.22 $585.17 5442 T

Injecttriggerpoints=/>3 20553 $64.82 $44.31 $35.10 $223.76 5441 T

Pulmonary SleepLab 95810 $633.49 $123.81 $0.00 $856.44 5724 S

APC SI

PhysicalTherapy

Specialty Service

Non-Facility

(Global)

Facility(Prof-

only)

MedicareReimbursementtoFacilitiesandPhysicians,bySettingandbyMedicareBenefit

Pain

Management

PhysicianFee FacilityFee

ASCOutpatient

HospitalCPT

PartB PartA

P a g e 15 | 16

Below are reimbursements by procedure for the Facility Fee (in an ASC or HOPD) or for the Technical Component of a global fee paid for services in a physician office:

At new HOPDs, reduction in Service facility-related Medicare reimbursement

Cardiac diagnostics ~ 60+ %

Office visits ~ 50-60 %

Pain management ~ 40-50 %

Surgery ~ 40-50 %

Imaging ~ 40-50 %

Physical Therapy 0 %

Asof: 1/1/2016 Atlanta

Specialty Service CPT (TConly) CommentsAll Officevisit,establishedpatient,Level4 99214 $29 n/a $102 $73 250%

Imaging MRIJointLowerExtw/ocontrast 73721 $169 $153 $274 $121 79%MRILunbarspinew/ocontrast 72148 $149 $148 $274 $126 83%

PTevaluation 97001 $76 n/a $76 $0 0%Manualtherapy(per15minutes) 97140 $30 n/a $30 $0 0%Therapeuticexercises 97110 $33 n/a $33 $0 0%E-Stim1/>notWndCarePart G0283 $14 n/a $14 $0 0%

Cardiology CardiacRehab 93798 $11 n/a $104 $93 832%Echo 93306 $167 n/a $417 $250 150%NuclearStressTest/TMST 78452 $415 n/a $1,108 $694 167%Pulmonarystresstest/simple 94620 $26 n/a $91 $65 252%StressECHO 93351 $188 n/a $417 $228 121%

GI DiagnosticColonoscopy 45378 $187 $421 $753 $332 79% GIswilltypicallyownanASC

Orthopedics Kneearthroscopy/surgery 29881 n/a $1,340 $2,396 $1,056 79%Wristendoscopy/surgery 29848 n/a $814 $1,455 $642 79%

Injforamenepidurall/s 64483 $108 $327 $585 $258 79%Injforamenepiduraladd-on 64484 $36 $0 $0Injectspinec/t 62310 $134 $327 $585 $258 79%Injectspinel/s(cd) 62311 $135 $327 $585 $258 79%Injecttriggerpoints=/>3 20553 $21 $35 $224 $189 537%

Pulmonary SleepLab 95810 $510 n/a $856 $347 68%

Site-of-ServiceDifferential

PainManagemen

MDswillusuallytrytoperformtheseproceduresinan(owned)ASC

PhysicalTherapy

ReimbursementbySetting HospitalPremiumoverlower-costsetting

ASC/Other

OutpatientHospital

MedicareReimbursementforCommonOutpatientProcedures:FacilityFeeor"TechnicalComponent(TC)"ofGlobalFee

PhysicianOffice

Facil ityFee

P a g e 16 | 16

Overview of Progressive Healthcare

Founded in 1997, Progressive Healthcare is a healthcare advisory services firm that provides:

• Consulting (strategic, financial, operational)

• Outsourced Services (ambulatory clinic set-up and management, Medicare CCM, ACO management).

We focus on Integration:

• Physician-hospital

• Clinical, financial, and programmatic

• Provider and payors / employers

Our offices are located in Nashville and Atlanta.

Contacts:

Rick Buchsbaum Rick@ProgressiveHealthcare.com

Bob Cameron BobC@ProgressiveHealthcare.com

Pete Dandalides, MD PDandalides@ProgressiveHealthcare.com

Jim Price Jim.Price@ProgressiveHealthcare.com